Continental Reports First Quarter Loss

15 April 2003

HOUSTON, April 15 /PRNewswire-FirstCall/—Continental Airlines (NYSE: CAL) today reported a first quarter net loss of $221 million ($3.38 diluted loss per share) including a previously announced after-tax special charge of $41 million ($.63 diluted loss per share) primarily related to the reduced market value of its MD-80 fleet and spare parts associated with grounded aircraft. The First Call estimate for the quarter was $2.80 loss per share, or $3.43 loss per share when adjusted for the special charge.
First quarter results were significantly impacted by the war in Iraq and its effect on fuel prices. Fuel prices were 63.7% higher, year over year, resulting in approximately $135 million of additional fuel expense.
“In spite of the convergence of a war, domestic terrorism, SARS, a poor economy and high fuel prices, coupled with one of the highest tax burdens of any industry, we`re going to make it across the finish line,” said Gordon Bethune, Chairman and CEO. “Our strength is the unwavering integrity and professionalism of our employees and our product.”
First Quarter Revenue and Capacity Results: First quarter passenger revenue was $1.9 billion, unchanged from the same period last year. The airline`s first quarter mainline jet capacity increased 0.7 percent compared to the first three months of 2002. Continental`s mainline jet load factor in the first quarter of 2003 decreased 4.4 points to 69.6 percent, compared to the same period in 2002.
Continental outperformed the industry in cargo growth during the quarter, and the airline provided the U.S. military with capacity that exceeded its Civil Reserve Air Fleet (CRAF) commitment. These factors helped to drive a 40.5 percent increase in “Cargo, mail and other” revenue.
In March, in response to lower demand as a result of the war in Iraq and the outbreak of SARS, Continental reduced capacity on certain trans-Atlantic and Pacific routes and decreased capacity in its summer schedule by an additional two percent.
Continental maintained its domestic length-of-haul adjusted yield and revenue per available seat mile (RASM) premiums to the industry in spite of a decline in mainline jet RASM of 3.6 percent.
For the first three months of 2003, Continental reported a mainline jet on-time arrival rate of 82.1 percent and a completion factor of 98.8 percent, despite severe weather across Continental`s system including the winter storm that paralyzed the northeastern U.S. over Presidents Day weekend. For the quarter, Continental reported 22 days without a single flight cancellation.
“Our employees did an outstanding job of keeping the airline running smoothly throughout the very tough winter weather we faced,” said Larry Kellner, president and chief operating officer. “We expect to perform at optimum service levels throughout the busy summer season.”
Just prior to the start of the war in Iraq, Continental implemented a Flexible Travel Policy that allows customers ticketed through May 18 to make a one-time change to their travel plans without incurring a change fee.
Continental implemented internet check-in for eTicketed customers traveling throughout the United States. The new service offered at continental.com allows customers without checked luggage to check in and obtain a boarding pass at their home or office and proceed directly to security at the airport.
In March, the U.S. Department of Transportation (DOT) completed its review of the marketing agreement among Continental, Delta and Northwest. The marketing agreement, when implemented, will bring consumers increased service levels and broader choices of destinations.
Continental recently began interline electronic ticketing with Delta and US Airways, allowing customers to use a single electronic ticket when their itineraries include travel on Continental and either of the two carriers. Delta and US Airways join the growing list of successful interline electronic ticketing agreements Continental has with Northwest, American, United, Alaska, Aloha and America West.
Geneva on March 6. The new flight is the only nonstop service between the airline`s New York hub at Newark Liberty International Airport and Geneva, headquarters to a host of international agencies and multinational corporations. Continental Express also initiated these routes during the first quarter: New York- Madison, New York-Augusta and Houston-Augusta. Also during the first quarter, Continental began code-share service with SNCF French rail to facilitate connections beyond Paris/CDG, and started code- share flights with Cape Air in the Puerto Rico/Caribbean region.
Continental is the most admired international U.S. airline among Fortune magazine`s annual list of America`s Most Admired Companies. For the fourth consecutive year, Continental ranks No. 2 as the Most Admired U.S. Airline, and rates highest for the quality of its products and services. Continental also ranks No. 2 on the list of Most Admired Global Airlines, higher than any other U.S. airline on the list of global air carriers. Continental is the only U.S. airline on Fortune`s Global All-Stars list, which ranks companies globally in a wide variety of industries. In addition, for the sixth consecutive year, the airline was named to Hispanic magazine`s Corporate 100: One Hundred Companies Providing the Most Opportunities for Hispanics. ——-